TLDR
- Zscaler reports fiscal Q4 earnings on September 3 after market close
- Jefferies raised its price target on ZS to $220 from $200, maintaining a Buy rating
- Consensus Q4 ARR growth estimate sits at 24.2% year-over-year
- Previous Q3 guidance disappointed investors, calling for FY2027 ARR growth of just 16-17%
- Forward guidance will be the key market mover, not the headline numbers
Zscaler reports its fiscal fourth-quarter results today, September 3, after the closing bell. The stock is trading around $172.73 heading into the print, down over 3% on the day.
The setup is an interesting one. Zscaler’s last earnings report actually showed solid numbers, with 25% revenue and ARR growth in Q3, along with record adjusted operating margins. But the stock sold off anyway. The culprit was guidance, specifically a FY2027 ARR growth outlook of just 16-17%, which spooked investors.
That cautious call set a low bar going into today’s report. Whether management raises that bar is the only thing that really matters tonight.
Jefferies analyst Joseph Gallo raised his price target on ZS to $220 from $200 this week while keeping a Buy rating. He called the FY2027 ARR guidance “very reasonable” and flagged Q1 as potentially well-positioned for organic ARR acceleration, partly due to federal tailwinds.
Gallo noted that consensus expects about $220 million in net new ARR for Q4, while some investors are hoping for closer to $245 million. His survey work suggests the higher bar will be harder to clear.
Valuation Still Looks Attractive
On valuation, ZS trades at roughly 41 times next-twelve-month free cash flow. That compares to Palo Alto Networks at 54 times and Fortinet at 48 times, making Zscaler the cheaper option among its large-cap peers heading into this report.
Zscaler’s remaining performance obligation, essentially its revenue backlog, grew 30% in Q3 to $6.5 billion. That’s a number worth watching tonight too. If bookings continue to outpace reported revenue, it points to growth picking up down the road.
Peers Set a High Bar
CrowdStrike and Palo Alto Networks both reported results recently that showed AI is driving a pickup in cybersecurity spending. CrowdStrike posted its highest-ever net new ARR growth rate, and management guided FY2027 with net new ARR growth 630 basis points above prior levels. That report sent the stock near all-time highs.
Palo Alto reported Q4 adjusted EPS of $1.02 on revenue of $3.41 billion, topping estimates of $0.98 and $3.35 billion respectively. Despite beating, PANW stock dropped over 9% as investors focused on the Q1 outlook.
That pattern, beating estimates but falling anyway, is worth keeping in mind for Zscaler tonight. The headline beat alone is unlikely to be enough.
The Jefferies analyst noted that the SecOps and Agentic AI opportunity for Zscaler is still one to two quarters away from becoming a fundamental catalyst. Q1 FY2027, not Q4 FY2026, may be where the real story starts to develop.
Zscaler’s last close was $172.73.
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